Phoenix Footwear experienced a slow third quarter because of cancelled orders from one of their key footwear accounts and lagging military orders in their Altama division. The two bright spots for the company were Royal Robbins, which remains one of the most profitable brands for the company, and the newly acquired Tommy Bahama footwear brand, which just opened up several new accounts including The Walking Company.
Even though the groups third quarter sales increased 47.9% to $34.3 million, the companys profitability fell with net income for the third quarter dropping 57.7% to $981,000 compared to net income of $1.7 million last year. Earnings fell to 12 cents per diluted share, on 8.4 million weighted-average shares outstanding compared to 24 cents per diluted share, on 7.3 million weighted-average shares outstanding. These declines are primarily due to integration charges and the shortfalls in PXGs department store shoe business and Altama.
Royal Robbins accounted for 21.6% of PXGs third quarter sales and reported top line growth of 15.6% to $7.4 million, compared to $6.4 million last year. Phoenix also finalized an agreement with its Canadian distributor whereby it will take back the distribution rights. Beginning in 2006, the company will begin selling directly in Canada which should result in higher sales and better margins. Finally, the brand continues to open up new accounts including 18 Academy Sports doors, with additional growth planned for spring 2006. The brand has booked double-digit growth in spring futures with each of its key national accounts. During a conference call with analysts and the media, PXG management said they expect double digit growth out of Royal Robbins during the 2006 fiscal year.